If the Auditors Obtains Sufficient Appropriate Evidence on the Entity's

question 165

Multiple Choice

If the auditors obtains sufficient appropriate evidence on the entity's accounts receivable balance by alternative procedures because it is impracticable to confirm accounts receivable, the opinion on the entity's financial statements should be unmodified and would

• A)disclose the fact that alternative procedures were used due to client-imposed scope limitation.
• B)disclose in the Basis for Opinion Section that confirmation of accounts receivable was impracticable.
• C)not mention the alternative procedures.
• D)include an other-matter paragraph that discloses the performance of alternative procedures.

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Definitions:

Probability of Nonpayment

The likelihood that a debtor will default on their loan obligations, not repaying the principal or interest.

Revenue

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Cash Discount

Cash Discount is a deduction from the stated price of goods or services, offered to purchasers as an incentive for payment in cash or within a specified period.

Credit Policy Effects

The impact of a company's credit policy on its finances and sales, influencing factors like cash flow and customer loyalty.